Embracing the digital revolution is critical in order for insurance carriers to thrive in the coming decade. As a culture, we are in the midst of the fourth industrial revolution driven by AI, the IoT, big data analytics, and other forms of industrial/corporate automation. Indeed, with digital solutions at the center of everything we do, it has become essential for insurance companies to expand their distribution methods.
What does the digital insurance landscape look like in 2021? How can savvy insurance carriers rise to meet the multi-modal needs of their customer base? Thus, we’re going to take a look at how the proliferation of digital technology has affected insurance distribution methods and how your company can harness the power of new and emerging distribution models.
The Changing Face of Insurance Distribution
Traditional insurance distribution models involved face-to-face sales carried out by an agent or broker followed by an underwriting process that went on behind the scenes. But as industry in general shifts in accordance with the advent of digital solutions, the insurance field has had to keep pace as well.
According to a European survey conducted by McKinsey, 84% of customers implemented digital solutions as part of their insurance buying journey. This not only implies that acceptance of digital-based distribution channels is at an all-time high, but also that the average customer uses multiple distribution channels in the same transaction.
The Need for Digital Solutions
The rate at which consumers are adopting online sales channels drives the advent of digital insurance distribution. However, so have changing societal factors. A 2017 McKinsey whitepaper served as warning to industry professionals. Between 2015 and 2017, the US auto insurance industry lost $4.2 billion dollars due in part to changing safety standards and advancing vehicle tech, but also a failure to adapt to the changing digital landscape.
The net result: evolution is a necessity, not an option.
Leveraging APIs to Expand Your Digital Insurance Footprint
How can the modern-day insurance carrier span this gap and harness emergent technology to create new distribution opportunities? First, by understanding what their customers want.
In 2021, customer experience is of the utmost importance. The customer experience must be during the digital insurance revolution:
- Lastly, compelling
Carriers must offer distribution methods that are readily accessible across a wide range of devices. The best tool in the carrier’s digital arsenal? APIs.
API stands for application programming interface. APIs represent a way for insurance carriers to augment their distribution footprint by helping coordinate more effectively with distribution partners. For example, an effectively built API lets customers interact with your online sales channel through services that aggregate insurance quotes from a range of competitors. Using an API radically increases your visibility on a search engine’s results page. It also allows customers to directly interact with the SERP. In essence, it creates a sales channel all its own.
In turn, the use of an API alters the course of enrollment transactions. Thus, enabling multi-channel switching akin to the ideal experience cited by McKinsey’s German customers. Further, the modern-day sales path may begin with an aggregated quote search, divert to your company’s website, ending with direct contact from a broker.
The bottom line: providing choice, ease of use, and adaptability to your customers.
The Digital Insurance Horizon: What Comes Next?
The insurance industry finds itself at a crossroads. Indeed, changing trends in delivery models have forced carriers to embrace a multi-modal, digitally-centered distribution approach. Then, those who adopt digital sales channels, giving their customers suitable latitude and augmented access, will find themselves ideally positioned as digital delivery methods mature over the coming decade.